5 gut checks before the stock market’s opening bell

By Shawn Langlois

Reuters

Good morning.

Here we go again. Just when Friday brought to an end the string of triple-digit swings on the Dow and instilled some much-needed calm over the global markets, U.S. investors are waking up to a meltdown in China.

If the PBOC’s reluctance to intervene wasn’t enough, Goldman Sachs goosed the sellers by cutting the country’s economic growth forecasts through 2014 due to “soft cyclical signals and recent tightening of financial conditions.”

This drop is the latest, and perhaps clearest, chapter in the emerging-market exodus that, according to the Sober Look blog, has seen investors “dumping emerging-markets equities and bonds with the intensity not seen since the financial crisis.”

The buzz: Facebook
/quotes/zigman/9962609/quotes/nls/fbFB, riding the unveil of its video service as well as an analyst upgrade, bucked weakness in the broader market last week. But the company also admitted Friday that a glitch in its system spilled some contact info on some six million users, and the stock is down 1% premarket.

Bloomberg

More troubling headlines about the Dreamliner have thrust Boeing
/quotes/zigman/220026/quotes/nls/baBA back into the spotlight. This latest glitch has to do with a brake indicator issue that caused United to make an emergency landing. This follows an oil filter problem last week and a glitch in its anti-icing system before that, both of which led to unscheduled landings.

The chart of the day:Gold
/quotes/zigman/6585799GCQ3 isn’t getting much love to start the week. Goldman cut its targets, Citi says sub $1,100 is “not an impossibility,” and Carl Swenlin on Decision Point paints an even drearier picture. He says that while “an important bottom may arrive at any time,” the “congestion” on the left side of this chart suggests $1,000 makes the most sense. “Gold is in a bear market, so we don’t expect bullish outcomes,” Swenlin wrote. “Bottom-pick at your own risk.”

Decision Point

The call of the day: Peter Brandt of Factor Trading is looking for crude
/quotes/zigman/2291781CLQ3 to drop to $65 a barrel, a 30% plunge from where it’s at now. He came to this target using a series of charts that “could be an accident waiting to happen.” For those doubting a move of this magnitude, Brandt says you can “take your pet macro economic/fundamental scenario and burn it with the trash.” This chart shows what he calls “a tremendous amount of compression that will at some point be released.”

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Need to Know (NTK) guides investors to the most important, insightful items required to chart a course ahead of each trading day. Anchored by lead writer Shawn Langlois, NTK will sift through the fire hose of news, commentary and data, from traditional and non-traditional sources, and extract what’s most essential. You can start reading NTK here as it begins publishing at approximately 6:30 a.m. ET, or sign up here to get a version in your email box every morning at approximately 8:45. a.m. ET.